Study On The Negative Pledge Clause Of Asian Infrastructure Investment Bank

The Asian Infrastructure Investment Bank(AIIB)issued General Conditions for Sovereign-backed Loans(General Conditions)to regulate its financing operation in 2016 May.The AIIB' s negative pledge clause is modeled on the International Bank for Reconstruction and Development's(IBRD).However,such unmodified legal transplantation is not suitable for the AIIB,and will cause many problems in the future practice.This paper will analyze the negative pledge clause of AIIB.The first chapter is a brief introduction of negative pledge clauses.The negative pledge clauses will be altered with the loan agreements,and can be divided into two categories,pure negative pledge clauses and affirmative negative pledge clauses.The negative pledge clauses in international borrowing are generally made up of five parts:the lender,the borrower,the guarantee,the assets and the exception.Especially,in a loan agreement with a multilateral development bank as a lender,the multilateral development bank will set aside a waiver policy.The main function of the negative guarantee clause is to limit the behavior of the debtor,to avoid damage to the creditors.The second chapter mainly discusses the reasons for the.application of AIIB's NPC.From the perspective of the AIIB itself,the negative pledge clause can reduce the risk of the bank's loans and prepare for its entry into the capital market,raising the credit rating of the bank.Externally,the AIIB needs to cooperate with other multilateral development agencies.Therefore,the AIIB needs to have consistent negative pledge clause with other development banks in order to avoid the complication of the rights and obligations.Nevertheless,the section 5.02 of the General Conditions still exists obviously problems that the scope of NPC is too broad while the boundary is unclear.These issues will have a negative impact on both the borrower and the bank itself.In the third chapter,due to the excessive use of NPCs,multilateral development banks tend to adopt waiver policy to limit the scope of application.The part will offer suggestions to AIIB by analyzing other multilateral development banks's,especially the IBRD's waiver policy.In order to meet the current situation of the international financial market and to balance the interests of banks and debtors,the AIIB is more suitable for moderate waiver policy.